Sole or Multi LLC

[N/A N/A]

Need help on what type of LLC to form. My wife and I jointly own rental properties and would now like to get some protection from LLC. In looking up information I see that you can either form a sole owner or multi-owner. Is there any advantage to one versus the other?

[James Miller]

If your CPA told you that you would be personally liable differently than your partner because of the tax distinction of GP versus LP, I suggest you get clarification or a second opinion. However, yes, one of you could be TAXED as a GP and one as an LP, even though you were both members of the same LLC. (You could also both be taxed as a GP if you both are managers.)

If you have income subject to SElf employment taxes, the GP will pay higher taxes than the LP. For such businesses it's common to form a second LLC to be a 1% owner of the first LLC and act like the GP to reduce self employment taxes the the members taxed as LPs.

Tax elections in LLCs are typically separate from whatever liability protection your state law gives you. You should consult with your lawyer and definitely don't use a CPA to form your entity. Lawyer for formation. CPA for taxes.